We’ve often talked about the triple lock here at the DPT blog, but now we’re actually getting to see it in action.
You may have heard that inflation rates have reached the highs of 3%, and that’s important for all recipients of the state pension as the triple lock dictates pensions will rise in accordance with whichever is higher:
- growth in national average earnings
- growth in retail prices as measured by the Consumer Price Index (i.e. inflation)
The Consumer Price Index is measured by the Office of National Statistics and records the prices of a comparative set of products – the government targets a 2% increase but the figures showed 3% inflation due in large part to rising food and transport prices.
While talk of excessive inflation can cause consternation (as well as the prospect of rising interest rates sooner rather than later), it does mean that the state pension is due a hike of 3%.
This means that from April 2018 the state pension will increase by £250 a year, to £8,545.50.
Naturally, this sum isn’t sufficient for many working people to sustain their lifestyle upon retirement, so it’s important to make plans for additional incomes such as savings, investments or personal/employee pensions. The best approach is to seek advice from a qualified specialist, preferably as early in your career as you can.